On the backdrop of Houston-based Noble’s problems in Israel, Cyprus and Egypt have upped their energy ties with a deal to sort out the technical details of laying an undersea pipeline that would carry offshore natural gas to Egyptian processing facilities.
Egyptian Petroleum Minister Sherif Ismail and Cypriot Energy Minister Yiorgos Lakkotrypis signed a memorandum of understanding (MoU) in Cairo on February 16 that will facilitate the cooperation between the two countries in the development and exploitation of the Cypriot Aphrodite offshore gas field in block 12 of the Cyprus Exclusive Economic Zone, utilising gas infrastructure existing in Egypt for the mutual benefit of the two countries.
The ministers said they hope a full-fledged agreement will materialise within six-months.
“This memorandum of understanding is a significant step toward strengthening cooperation between Egypt and Cyprus in the field of oil and gas, which will further deepen the friendly relations between the two countries,” the statement added.
Meanwhile, analysts say the Aphrodite field in Cyprus could replace Israel’s Leviathan as a source for Egyptian liquefied natural gas (LNG).
Just two weeks ago, the Cypriot Natural Gas Public Company (DEFA) elected not to extend a proposal regarding the purchase of gas from Israel’s Leviathan field, due to uncertainty surrounding the basin’s development.
At the same time, representatives of Noble Energy and Israel’s Delek Group – the main partners of both Cyprus’s Aphrodite field and Israel’s Tamar and Leviathan basins – flew to Egypt to discuss gas export agreements. Noble Energy holds 70% of Cyprus’s 100-billion cubic metre Aphrodite reservoir, while the Delek Group has a 30% share.
At Israel’s 621-billion cubic metre Leviathan reservoir, about 130 kilometres west of Haifa, Noble Energy owns a 39.66% stake, while Delek Group subsidiaries Delek Drilling and Avner Oil Exploration each hold 22.67% of the reservoir. Ratio Oil Exploration, meanwhile, has a 15% share.
The partners had originally planned to develop the Aphrodite and Leviathan reservoirs simultaneously, with Leviathan initially expected to be online already by early 2018, according to Israeli press. Because the Cypriot domestic market demands only about 1 billion cubic metres of natural gas per year, developing the Aphrodite reservoir for the local market would not have been feasible, yet the reservoir is too small to develop alone for export purposes.
However, on December 23, 2014, the Israeli anti-trust authority, under pressure from consumers and NGOs, threatened Noble and Delek’s holding of the Tamar and Leviathan gas fields. As a result investors in the region are unclear of their future and have subsequently suspended their activities, considering abandoning the region, leaving Eastern Mediterranean hydrocarbon potential unexploited.
While Delek Group and Noble Energy executives were visiting Egypt two weeks ago, industry sources warned that, because the companies are also the main shareholders in the Cypriot Aphrodite reservoir, they would be providing the British Gas consortium with a Plan B if necessary. The plan stipulated that if Leviathan is not developed on schedule as expected, Aphrodite would be able to supply Egypt’s LNG production plant in Idku.
Such an agreement would also enable the commercial development of Aphrodite, due to the external customer supplementing the domestic market’s needs.
http://www.neurope.eu/article/cyprus-egypt-pipeline-talk-shuts-out-israel